Italy cut its 2019 growth forecast for gross domestic product to 0.1% from 1%, according to Bloomberg, which cited a draft document. The report said Rome also raised its 2019 deficit forecast to 2.5% of gross domestic product. Italian policymakers in Rome have engaged in a long-running battle with Brussels on the appropriate level of fiscal easing. Both sides later agreed to a 2019 budget deficit of 2.04%. But those deficit estimates were based on modest growth, not economic stagnation. If Italy runs a fiscal shortfall exceeding the 2.04% level, Rome could run afoul of the European Union’s fiscal rules, reigniting a longstanding source of tensions.
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